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Shares in real estate agent Countrywide (CWD.L) plummeted -23% as the company projected £20m lower H1 EBITDA in its latest trading update, blaming a “subdued” market outlook. More importantly, it doesn’t see itself making up the difference in H2 either, making it, effectively, a FY profits warning.
Investors were running for the hills as this is a second quarter in a row that Countrywide has warned on lower earnings, hot on the heels of highly disappointing 2017 results. Countrywide had already warned in March of £10m lower adjusted H1 EBITDA. With the figure now upped to £20m, are we going to hear a new revised £30m number in September? £40m by year’s end? How low can Countrywide go?
The real estate agent’s never-ending troubles come after multiple profits warnings from housebuilders (Crest Nicholson, Berkeley Group) supporting the notion that the UK housing market is in deep trouble. After many years of strong expansion, have the chickens finally come home to roost for Countrywide, with its promises to halve M&A swollen debt and progress in reducing HQ headcount by a third not fooling investors?
While Countrywide reported that it property pipeline (properties available for sale) has returned to 2017 levels, that’s not exactly anything to be proud of, given the miserable 2017 results. As the Americans say: ‘lipstick on a bull’?
Artjom Hatsaturjants, Research Analyst, 25 June 2018
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